Question
A company operates at two activity levels: 70% and 80%.
The fixed costs are ₹40,000. The variable costs are ₹52,000 at 70% activity and ₹61,000 at 80% activity. What is the differential cost between these two activity levels?Solution
The differential cost represents the difference in total costs between the two levels of activity. In this scenario, the differential cost between 70% and 80% activity levels is ₹9,000.
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